Creating A Company Culture: A Necessity, Not A Luxury!

Imagine a person from another planet turning up at a funeral here on Earth. Without having to be told, he would know that a funeral is not an appropriate place to tell jokes. This, Professor Michael Tushman tells his class at Harvard Business School, is the meaning of culture.

But culture does more than inform employees what attitudes and behaviors are expected of them. Culture reflects a company’s soul and is responsible for generating human energy.

I have written this post with the intent that it respectfully encourages business leaders and management teams to recognize the importance of creating a company culture that converges intangible assets, particularly its intellectual, structural, and relationship capital.

Every company has a culture…

Whether by accident or by design, it is highly likely every company has a culture, says Dr. Phillip E. Atkinson in his paper titled ‘Creating Culture Change’.

However, in most instances, Atkinson suggests, a company’s culture is frequently a matter of accident or, simply luck. Unfortunately, in numerous instances, Atkinson found, a company’s culture may not match its strategy, its business plan, or its commercial intentions. In other words, a company culture may actually be counter to its needs. Further, Atkinson suggests, and I agree, it is not unusual to observe a company culture that actually drives clients and customers away because its focus is primarily internal to the exclusion of being sufficiently external (customer, client) oriented.

Examine company culture for…

As conveyed countless times throughout this blog, a well designed, configured, and balanced company culture that genuinely reflects each relevant component of a company’s mission can be a very valuable intangible asset that delivers competitive advantages in multiples. It’s prudent then for business leaders and management teams to assume an obligation, if not fiduciary responsibility to periodically examine and assess their company’s culture for (a.) balance, (b.) match, and (c.) resilience.

There is ample evidence, along with just plain business sense, that for numerous companies globally, success, measured as elevated value, expanded sources of revenue, opportunities for growth, profitability, and sustainability, etc., flow from an agreeable and well executed company culture.

Key components of an effective company culture…

The key components of this type of company culture are that it respectfully harnesses, exploits, and utilizes its intangible assets which I describe as ‘contributory value’ assets, i.e., intellectual, structural, and relationship capital. In most instances, these and other intangibles are accepted, shared, and ultimately embedded in company practices and processes.

A resilient company culture…

A company cultures’ resilience is indeed important, and a facet that should not be taken for granted or otherwise overlooked. A cultures’ resilience translates as how receptive and readily adaptive it is – can be to the increasingly nuanced types of global, multi-partnered, and multi-cultural business transactions that are common in a manner that elevates the probability that the outcomes – results will be favorable and meet or surpass projections.

A well designed and executed company culture, recognized as a culmination of intangible assets, will deliver superior performance, providing, of course, resilience and sustainability have been prominently embedded along with a balanced internal – external orientation that reflects the company’s mission and achieves competitive advantages relative to its respective (industry) sector.

However, company cultures’ require working in ambiguous and perhaps subjective arenas, relative to how (company) beliefs and values eventually surface as accepted processes, practices, group dynamics, and ultimately expected behaviors.

This culture has to change…

Atkinson appropriately asks, how many times has the phrase ‘this culture has to change’ been uttered by business leaders and management teams? To be sure, in recent years we have heard this phrase often relative to the global banking crisis, the recent exposures about the media, publishing of Edward Snowden’s revelations, the continued poor performance of educational systems, and the list certainly does not end there.

Respecting Atkinson’s near term as well as over-the-horizon research regarding company culture, it’s certainly not challenging to infer a significant percentage of company cultures are not, or they are ineffectively, aligned with a company’s mission, the various transactions it becomes engaged, or its purpose. Surely, at some point, business leaders and management teams will recognize that it does not require publicly embarrassing revelations and/or investigations that produce substantial and long lasting reputation risk to recognize that in a number of instances, remedial (company culture) action is necessary and is the absolute correct thing to do.

Before those of us who are strong company culture advocates jump into this fray, it might be a good idea to bring more clarity about precisely what company culture actually is and how it can be built, shaped, installed, nurtured, monitored, and sustained.

Remember, a company’s culture is an intangible asset…

Admitted, there remains confusion, even among the higher echelons, about company culture and how to recognize it warrants changing to be better, more relevant, and actually fit or merge with the economic fact that today, 80+% of most company’s value, sources, of revenue, and ‘building blocks’ for growth, profitability, and sustainability either lie in or evolve directly from intangible assets, which company culture is a prominent one.

A company’s culture should be or become the driving underlier to company’s forward movement, Atkinson suggests. More specifically, a company culture consists of its infrastructure and the proverbial glue that connect employees and processes (structural capital) to generate positive outcomes and results while being aligned with the business plan and vision for the future.

So, for 2014 and beyond, it’s important that business leaders and management teams recognize, whether by accident, design, or luck, their company already has a functioning culture in place. The assessment that must be performed however is whether that culture meshes with the company’s strategy, business plans, and overall commercial intentions. a company. If not, often with slight modifications, managerial nurturing, and time, the existing culture can be re-oriented to better connect with a company’s needs.

This post was inspired by the excellent work of Phillip A. Atkinson, particularly his 2004 article titled ‘Creating and Shaping a Performance Driven Culture’.